The German finance minister's advice to
get it done within six days seems to have fallen on deaf ears. We are taking our
own time; even when we know that the last resort is to go to the lender of the
last resort. With the issue of external liquidity still unresolved, our economic
managers seem busy making last ditch effort to avoid IMF assistance. The
unceremonious return of Mr. Shaukat Tareen from Saudi Arabia doesn't seem to be
the harbinger of good tide. Since we have a squeezed timeline, we can not afford
to dilly dally. We have to be decisive as there is much at stake.

The banking sector, the capital market,
the business, the industry all are in limbo. None of our friends seems to have
agreed to an outright cash bailout. Their half commitments are based on
roundabout techniques to see us through the crisis. There seems to be a trust
deficit all around and rightly so, as we have an inglorious history of financial
scams. We have yet another history of being smart to one another within the
national boundaries. Once pitted against global adversaries, we are always found
lacking in wit and guts. By now, we should have understood that we have landed
ourselves into a financial trap, courtesy our own wrongdoings. We are going to
get nothing on our own terms. Even Saudi Arabia is not going to allow us a
single barrel of crude oil on deferred payment terms, until and unless a yes
vote is passed by the US. China, although having no such constraint, is not
going to single out itself by offering us a cash bailout in utter disregard of
US simply because we have never proved ourselves worthy of the much trumpeted
friendly ties. We ignored Chinese sane advice in 1971 and halved the country. We
disregarded China's interest in our economic growth and deep involvement in a
number of strategic projects like Gwadar during the last eight years or so and
ended up as big economic losers for some so-called democratic gains. How many of
us know that China feels disgruntled over the events that took place in our
country during the last one year?

The Friends of Pakistan is a project
lunched by the US. It's a 'marriage of convenience' type arrangement to bail us
out strictly on US terms. The mission statement of project sponsors: your
political crudity and economic inconsistencies notwithstanding, we recognize
your strategic position and are prepared to help you out but certainly not on
your terms. Being assured of no hard cash assistance from any side and convinced
that the aid will come only through an IMF program, we should make haste and
finalize the emergency portion of BOP assistance deal. Having done that, we can
explore the possibility of a much cheaper assistance. The Exogenous Shocks
Facility (ESF) is a special short-term liquidity financing instrument recently
modified by IMF. This program is tailored to assist low income countries whose
economy suffers from exogenous shocks like trade disruptions in war like
situation, natural catastrophes and unusual global price hikes. The assistance
under PRGF (Poverty Reduction Growth Facility) and ESF is much cheaper as
compared to the stand-by-arrangement facility that we are pursuing. We can make
a good case for ESF as our country is passing through economic hardship wreaked
by the war on terror and global oil and commodity price hikes.

WHY NOT IMF

IF NO ONE ELSE THEN WHY NOT IMF?

Resorting to IMF borrowing brings a bad
name to the democratic setup. Really? It imposes conditionalities that cripple
the developing economies. But then what about the economies that cripple
themselves and that too without any cogent reasons? Closing the argument, we
should examine the proposed conditionalities one by one.

1. The
IMF program asks Pakistan to reduce fiscal deficit from 7.4 per cent to 3.5 per
cent. That is not conditionality; it is something that is going to benefit us,
if we are able to do it. Of course, it will take a lot of doing. We will have to
cut non-productive expenditure and government spending. The army has already put
in abeyance its GHQ project. Let others follow the suit and contribute their
mite to achieve the target of 3.5 per cent deficit.

2. The
program asks to raise tax to GDP ratio from 10.5 to 15 per cent within the next
five years. Given the will to execute, this is not a difficult task. We have a
very narrow tax base which can be broadened considerably. Non-essential imports
can be further discouraged and the 384 item list be enlarged. Duties on pure
luxuries and 1500 cc plus cars can be doubled or even tripled. All untaxed
sectors now need to be taxed. This is what Mr. Shaukat Tareen has said. He has
been blunt enough to name the sacred sectors; agriculture, real estate etc. He
has touched the feudal lords on the raw; he should better beware. This is time
about that agriculture issue is settled once for all. If radical land reforms
are not in the offing, then the sector must be taxed according to the
landholding size and on progressive tax basis.

3. The
program asks the government to achieve zero net borrowing from the state bank.
This point is already on economic goals agenda of the government. IMF program
will simply ensure its implementation.

4. The
program asks to get rid of subsidies and apply cut to PSDP. The government has
already executed the dirty subsidy-job. The government has also decided to cut
the Rs.541 billion PSDP by Rs.100 billion. The final decision will be taken in
the next meeting of Planning Commission.

5. It
is feared that the IMF may ask for a further discount rate hike of up to 3.5 per
cent which may result in a historically high domestic lending rate. This fear is
more conjectural than real. This point can well be discussed with the IMF who is
said to have softened its stance on conditionalities.

6. The
IMF will monitor our banking and financial sectors and place its watchdogs on
all financed projects. It simply means that the IMF wants to share our
monitoring responsibilities. Let's take it as blessing in disguise. Moreover, it
will reduce the corruption chances to a minimum.

Given the IMF assistance being the only
recourse left, the much publicized IMF phobia is an attempt, by the vested
interests, to create confusion to drive the economic managers away from the
program. IMF monitoring of our economy will certainly plug a number of
corruption holes.

SAUDI PAK OFFERS CLEAR ADVANTAGE
IN TERM DEPOSITS

Saudi Pak Bank is creating a buzz
over its recently launched "Salana Munafa" term deposit scheme. The scheme
gives depositors 14.5% return in just one year of investment of Rs. 1 LAC
or more.

The market for term deposits is
currently very competitive with almost all the big banks (and many small
ones as well) flaunting their menu of term deposits. Even in this barrage
of advertising, Saudi Pak distinctly stands with its unique and 'must
have' product.

Saudi Pak Salana Munafa offers
14.5% p.a. for 1 year on as low a deposit of Rs. 1 LAC. Currently, no
other bank is offering such an attractive return on such a low investment
and term, giving Salana Munafa a clear advantage over all other term
deposits in the market right now.

Given this fact, Saudi Pak Bank
is also being extremely clear about the deposit scheme in their
communication. While some might promise big profits and hide large minimum
investments and long investment periods in the fine print, Saudi Pak has
put everything front and center. About the only thing in fine print is the
government tax that is required by all banks.

With the current economic
conditions, many citizens are concerned about how to best invest and
protect their savings. Saudi Pak Bank has chosen the perfect time to
introduce a term deposit with a clear advantage.